The S&P 500 faces more uncertainty after pulling back from its new local high.
The S&P 500 index pulled back from its new local high of 6,059.40 yesterday – it was the highest since February 21 as investors reacted to the lower-than-expected Consumer Price Index release. However, the market retraced its advance and closed 0.27% lower. Today, it is expected to open 0.2% lower after the Producer Price Index release, which came in lower than expected at +0.1% month over month.
Investor sentiment has improved, as reflected in yesterday’s AAII Investor Sentiment Survey, which reported that 36.7% of individual investors are bullish, while 33.6% are bearish.
Despite pulling back, the S&P 500 remained above the 6,000 level yesterday.
S&P 500 Futures: Slightly Below 6,000
This morning, the S&P 500 futures contract is extending its yesterday’s intraday pullback, breaking below the 6,000 level.
Yesterday, I noted that “No negative signals are evident right now; however, the market may be nearing a downward correction.” This proved correct as the market is pulling back slightly.
Conclusion
Stock prices are likely to open 0.2% lower this morning, slightly extending its yesterday’s decline. Currently, it looks like a downward correction of the recent advances. The market may also be entering a short-term consolidation.
Here’s the breakdown:
- The S&P 500 reached yet another local high before pulling back; however, it remained above the key 6,000 level.
- There are no clear bearish signals, but a downward correction is not out of the question at some point.
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Thank you.
Paul Rejczak
Stock Trading Strategist
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